Two corporate pubs closed abruptly over the weekend in Chattanooga: World of Beer downtown at 412 Market St. and The Fox and Hound Pub & Grille near Hamilton Place Mall.
World of Beer is flourishing, a company official said — but Fox and Hound's parent company is foundering and filed for bankruptcy for the second time in three years.
World of Beer closed because of a financial dispute between the franchisee here, Jax Beer Ventures, and the building's landlord, said Terry Halery, vice president of marketing at the craft beer tavern chain's headquarters in Tampa, Fla.
"I don't know all the details," Halery said. "[The closure] was an abrupt decision."
World of Beer, which launched in 2007 and now has more than 75 locations in 21 states — and its first international outlet in Shanghai, China — is growing and wants to stay in Chattanooga, he said.
"We're looking at various alternatives, because we're very bullish about Chattanooga," Halery said.
The Fox and Hound Pub & Grille closed Saturday, less than three weeks after its corporate owner filed for Chapter 11 bankruptcy reorganization in Delaware.
All 48 Fox and Hound restaurants are corporate-owned, but officials couldn't be reached for comment at the restaurant's parent corporation, Dallas, Texas-based Last Call, which also operates the chain restaurants Bailey's Sports Grille & Champps Kitchen + Bar.
Last Call has restaurants in 25 states that employ more than 4,700 full- and part- time employees.
While some Fox and Hounds are still open, others closed abruptly, including in Houston, Texas, and Wichita, Kan. A company official was quoted as saying under-performing stores were being shuttered as part of the bankruptcy reorganization.
A bankruptcy court filing says the restaurant chain — which also filed for bankruptcy in 2013, when there were 101 Fox and Hound restaurants compared to 48 restaurants on Aug. 10 when bankruptcy protection was sought — said the chain wasn't able to grow the business back.
An effort to renovate existing Fox and Hound restaurants and rebrand Champps as Fox and Hound locations was more expensive than expected and didn't significantly increase business, said the chain's chief restructuring officer Roy Messing.
A new menu "confused customers and alienated longtime patrons," Messing said. The chain's information technology systems were "woefully outdated," Messing testified, and costly and time-consuming to upgrade.
Changes in certain states' minimum wage laws and the Affordable Care Act, or Obamacare, increased labor costs and prompted the chain to convert nearly all of its employees to part-time, causing a number of them to leave, Messing said. The high turnover increased labor costs.
Perhaps, more than any other factor that hurt the chain, was weakness in the casual dining environment, he said.
"Despite the overall recovery in the economy, the casual dining environment remains depressed," Messing testified, citing a highly competitive industry and increased competition from fast casual options.
The Fox and Hound at 2040 Hamilton Place Blvd. has been in business since at least 2004.
Contact staff writer Tim Omarzu at tomarzu@times freepress.com or www.face book.com/MeetsForBusiness or twitter.com/meetforbusiness or 423-757-6651.